Cigarette Prices Soar: New Excise Duty to Hike Costs by 20%

• Central government's increased excise duty is set to raise cigarette prices by up to 20% from next month, with new tax structures effective February 2026.
• A notification on December 31 detailed excise duty of 2,050 to 8,500 per 1,000 cigarette sticks, replacing the abolished compensation cess.
• The new excise duty, higher than the old cess, creates a 'tax on tax' situation, as it's included in manufacturing cost before GST.
• An example shows a 15-rupee cigarette could become 17-18 rupees due to the increased tax burden.
• ITC shares plummeted 10% and Godfrey Phillips by 17.6% following the news, reflecting investor fears of decreased sales and profit impact.

Why It Matters: New excise duty will significantly increase cigarette prices, impacting consumers and tobacco companies' stock performance.